A university-based compulsory system of invention management necessarily imposes institutional claims on innovation. Invention administration comes within institutional requirements for risk management, for contracting, for consistency, and for following policies, no matter how badly conceived and how out of date and how poorly suited to any particular situation. The institutional imperative is to train people to conform, manage for efficiency, and question the need for exceptions.
No matter how talented the licensing office staff, institutional efforts to manage inventions under a compulsory system do a generally poor job. Institutional management of inventions ends up as patent accumulation and portfolio thinking.
That is, the financial success of the portfolio of inventions overall is more important than the outcomes of use of each invention in the portfolio. Portfolio management is about making money on some few inventions. Winners pay for losers. Accumulation inevitably leads to more patents than one can possibly . “market” for investment Accumulation becomes instead an opportunity to troll industry for payment based on infringement rather than investment. Industry is coming to understand this, and sees patent accumulation by universities as a source of uncertainty and liability, not as opportunities for collaboration.
While trolling is legal and a proven money-maker, there is nothing in the Bayh-Dole Act that authorizes trolling as a cornerstone of federal research invention policy. Bayh-Dole instructs federal agencies sponsoring research to use the patent system to promote the use of inventions made with federal support. The Act does not say, get a bunch of patents and make money on a few. The Act does not even mandate that anyone should make money. The point is: for each invention that one claims, use the patent system to promote use. Use does not have to involve commercialization at all. It may be use through internal operations, or by creating a standard, or by showing how a research insight operates. These kinds of uses—all important to research and to industry—are lost on the accumulating, commercializing, portfolio-based institutional invention management office.
We may then ask, is patent trolling even permitted under Bayh-Dole? That is, can a university obtain title to a subject invention, obtain a patent, and then exploit its ownership position to shakedown industry for payments? That is, do the objectives in 35 USC 200 count for anything? Does, furthermore, the stewardship obligation for universities receiving federal grants (2 CFR 215.37) count for anything? Apparently not.
In 35 USC 200, we find the objectives for Bayh-Dole. There we find an objective speaking about building nonprofit collaborations with industry, with universities called out in particular. Why would Congress call out universities? Might it be because universities are expected to behave differently than the typical patent owner under Bayh-Dole? We also see objectives expressed in terms of ensuring that exploitation does not interfere in research and discovery. Yet universities routinely do not license for internal research use, not for other universities and non-profits, and not to industry. The aim is to go after money rather than freedom to conduct research.
We see further an objective to commercialize inventions, but this is coordinated with making inventions available to the public. That might mean, on the one hand, through sales of commercial product, but it also may mean, open access to subject inventions without the need to buy from anyone. Universities as proprietors of patents are distinctively positioned to do well at the latter, but consistently have chosen to focus their attention on “commercialization”, which means, generally, finding friendly monopolists willing to pay for patent rights.
We also find in 35 USC 200 that an objective of the Act is to protect the public from non-use and from unreasonable use. University patent administrators appear to think this objective gives them a mandate to take title to inventions from faculty inventors and shake down industry with the resulting patent rights. But the Act is directed primarily at federal agencies, an this is the objective that gets at march-in rights—that is, it is directed at authorizing the agencies to make sure universities don’t do bad things. The agencies are to protect the public from university behaviors, such as accumulating patents without promoting use, or suing companies who are practicing an invention when the university has no licensees making any investment in the invention. Suing a company already using what one is supposed to promote the use of would, one might think, be an unreasonable use. What is odd, then, is seeing that university administrators are reading the law to mean that they, the administrators, have a mandate to protect the public from faculty inventors by taking ownership of their inventions. How very twisted!
These objectives in the law are stated generally. While the law in its particulars is directed at federal agencies, and is implemented by having those agencies include particular contracting clauses for patents in research agreements with nonprofits and small companies, the objectives do not differentiate among the various participants involved. Agencies, universities, inventors, and companies can all read the objectives and see what roles they might play to achieve these goals. Of course, if the objectives don’t really matter, and are just there for introductory fluff, then they can be ignored as idealistic and non-serious, and university folks can get on with suing industry folks and trying to make money on some few of the inventions they claim.
This is what I believe: university patent administrators do not intend to take the objectives set out in Bayh-Dole seriously. They intend, rather, to substitute their own objectives and rationalize that these new objects are what “Congress really intended”.
If, however, Bayh-Dole sets up a mandate for universities to use the patent system for each invention claimed by the university, then these things would appear to be true:
1) A financial portfolio approach to subject inventions is inconsistent with Bayh-Dole’s statement of objectives. A university is accountable for subject inventions the university claims, invention by invention. It does not matter that one invention “makes money.” What matters is that for each invention for which ownership is claimed, there is an effort to promote use of the invention. This focus on each invention is essential to a focus on research and discovery, as distinct from a focus on a portfolio of patents.
2) A university should lack standing to sue for infringement of patents on subject inventions without its own efforts to develop the invention or licensees doing this in place. That is, patent trolling for money based on industry adoption of a subject invention is not within the objectives of Bayh-Dole. Such trolling penalizes use rather than promotes use, creates uncertainties, and works against widespread adoption of subject inventions. This is one case where it’s not even about “prior user rights”—the whole point is to get users.
I don’t expect either of these points to get serious consideration within the university patent administration community. For the university patent administrators, the objectives of Bayh-Dole are not what are put forward in 35 USC 200, but rather that universities should own inventions made with federal funding as expeditiously as possible, and they should make money however they can by exploiting patent rights in these inventions. It’s good enough if there are a few “success” stories in the portfolio.
If, however, folks wanted to come at Bayh-Dole within the framework of objectives the Act sets out, then the emphasis should be on selectivity and negotiation—any agent involved should only accept ownership of subject inventions the agent is prepared to place into circulation. Further, a university ought take ownership primarily to manage public access associated with research and community development rather than as a platform for an exclusive deal or trolling litigation.
The role of the university in managing inventions would then be very different from current practice. If one wanted to set up exclusive deals or handle competitive pressures, the invention rights should never touch the university. Instead, rights should go from inventors to agents that specialize in invention investment, development, and competition. Under Bayh-Dole, such assignment is clearly permitted under 35 USC 202(c)(7)(A).
In such an approach, a university would not need to have a compulsory ownership policy for federally funded inventions. Instead, there would be a negotiation with inventors—not over money and ownership, but over the preferred method of deployment. If the inventors want the invention to move out with their research, then the university may be the appropriate steward for this activity.
If however the inventors want to start a company, then a 37 CFR 401.9 process is indicated, and the university should provisionally waive any interest conditioned on the funding agency’s agreement to allow the inventors to retain ownership. Why make a virtue of an unnecessary and restrictive “express” standard patent license to one’s own faculty inventors when there’s the 401.9 process already on the books?
Alternatively, if the inventors wish to work with an agent to license rights exclusively, then the university should work with the inventors to identify that agent and then assign the university’s Bayh-Dole rights (and obligations) under its patent rights clause in a deal that works for the inventors, the agent, and the university.
There are important roles for university licensing offices. Patent accumulation and litigation are not among them.